“In 1995, Chile did not represent any value, but today everything is different,” says economist Arnold Harberger in one of the scenes of the documentary film Chicago Boys. From 1953 to 1991 he taught at the University of Chicago side by side with Milton Friedman — figure, who became the unquestioned authority for a group of Chilean economists who received education in the USA in 1950-ies. It was there that the members of the group became interested in the teachings of Friedman on market economy, and then, after returning home, apply their knowledge in practice in the entire country. All this happened during the dictatorship of Augusto Pinochet.
In 2011, when in Chile erupted in mass student protests against economic inequality and increasing the cost of higher education, the journalist Carola Fuentes noted the changes coming in society. “Until recently, the Chileans were proud of the national economy. But what happened. Why people are unhappy. These are the questions we decided to ask those who developed the existing economic model — “Chicago-boys””.
What turned the Chile introduction the most radical version of the model of Friedman. This was a risky experience “crash test” before a similar experiment will be conducted by the leaders of other countries — Ronald Reagan and Margaret Thatcher. Tried to find it out Carola Fuentes and Rafael Valdeavellano, who directed the documentary, which was released in Chile in November. “Many of the reforms that the US was only being discussed in Chile has long been held — for example, privatization of the pension system, says Fuentes.
But I lived in USA, so I know that our countries differ in many respects. The Americans and social inequality, and illegal actions of entrepreneurs, but not on such a scale as in Chile”. The film tells us that in 1956 the Chicago and Catholic universities of Chile signed an agreement on international cooperation with support from Ford Foundation. As a result the United States went a group of students, which was to meet monetarism — the theory that asking the state to withdraw from the market regulation and control only the volume of the money supply.
Idea Friedman, developed in the mid 1940s, seemed too radical in the first years after the “New deal” Roosevelt. But gradually, under its influence the faculty of Economics of the University of Chicago became the intellectual center of America for the study of the theory of the free market. “The student exchange was a part of the investment plan of the State Department to increase US influence in Latin America, because at that time the authorities were concerned about the spread of communism in the region. Heres a visual evidence of the foreign influence of the United States to Chile,” said Carola Fuentes.
From 1956 to 1961 in Chicago arrived 25 Chilean students. Some of them immediately bought the camera (which was impossible to do at home) and started to remove almost all the moments of his journey — it is these archival footage used in the film Directors. Parties, classes, walking around campus looking at students everyday life, it is difficult to imagine that we see the future economic elite of the Chilean military dictatorship. Back in Chile, the “Chicago boys” had hoped to practically apply what they have learned in America.
They began to develop a programme of economic reforms presented by the presidential candidate Jorge Alessandri. However, the election of 1970 he was defeated by the socialist candidate Salvador Allende. When it continued work on a project of reforms so broad that it was called El Ladrillo (the brick). The final version authored by one of the members of the group, Sergio de Castro, was given to Admiral josé Toribio Merino.
Subsequently, Merino will join the junta, supported by the CIA to overthrow Allende and put the head of state General Augusto Pinochet. De Castro, the new government will be the Minister of economy and later Minister of Finance. Other members of the “Chicago boys” also will get positions in the government and militarists will remain at the helm 17 years of regime. Their program of economic development assumed reductions in fiscal spending to reduce inflation and solve financial difficulties.
They opened the country to foreign imports, allowed the privatization of a dozen state-owned companies and eliminate state control over the activity of the private sector. The Chilean economy became more open, but at the same time, the country began a persecution of the political opposition. In 20 years of the Pinochet regime, thousands of people went missing or were killed. Caught under heavy criticism for massive violations of human rights, first adopted the economic principles of Friedman.
Years later, the famous economist called the results of the work of his followers of the “Chilean miracle”. In 1975, he personally visited Chile and met with Pinochet, praised the steps taken by his government and the “Chicago boys” to support the economy. For USA link Friedman with the dictator became one of the most controversial sides of his heritage. According to the films Carola Fuentes, in Chile, was the first and most radical experiment to implement an economic model which is now called neoliberalism.
“We helped to form an economic model for other States. Without the experience of Chile is impossible to imagine Thatcher reforms in the UK and Reagan in the United States.”. Moreover, she claims that “Chicago-boys” are still proud of their contribution to the development of the country, although many Chileans following high-profile corruption cases have lost faith in the possibility of the existence of self-regulating market. “”Chicago-boys” I cant understand why the Chileans are not grateful for what they have done”.
Pinochet resigned in 1990 after a crushing defeat in the constitutional referendum. But even after years of economic model, implemented by the “Chicago boys” were left intact. The economic policy of the subsequent democratic governments did not differ from the epoch of Pinochet, and only the second presidential period of Michelle Bachelet, elected from the socialist party, steps were taken to reform labour legislation, pension system, education, health, and regulation of the financial system. All this met with resistance from conservative groups.
Today, many Chileans believe. During the years of the Pinochet dictatorship a bunch of people close to the regime grew rich at the expense of the other residents of the country. The boiling rage resulted in recent protests. “Yes, the Chilean economy has grown significantly, but for whom.
— asks Carola Fuentes. — The majority of Chileans got into debt, paying for education costs, healthcare, travel on long-distance routes and so on. Workers have very few rights, and those are almost always exploited by employers”. Half of working Chileans receives less than $445 per month, while 0.1% of the population of the country — $900 thousand.
Fuentes predicts that discontent with the economic system will grow. “The authors of the reform believe that secured economic growth of Chile, but, in my opinion, actually, we are lagging behind”. The movie “Chicago boys” received the prize of National film festival in Santiago for best Director. After two and a half months after the premiere, he became the second most popular documentary in the country.
Now the authors are looking to organize sessions in the USA, the home of the Chilean “economic miracle”.